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organise around value streams

In Excellence Is Not Enough Bill Waddell tells the story of Rittal, a German company with a plant in the US. The company has executed a startling turnaround in three years by implementing lean thinking from top to bottom:

“What particularly impressed me is that they approached lean from the opposite direction than that taken by most companies. They started with their organizational structure and made value streams the formal way they work, instead of the old functional departments the rest of us cannot seem to get past. They scrapped the data systems, thinking that just talking to each other was better than using bad data.”

This fits very well with my experience of transitions to agile in the softare development domain. It’s one thing to have a fast, effective, high-quality development team; it’s something better entirely when that team sits within a lean organisation. When the bottleneck is outside of development, it often seems as if we have a sportscar being pulled along by a donkey. And the message from Rittal is clear: as long as we retain functional divisions, the organisation is unlikely to improve much. Having an agile software development department is good; but having a software development department that is an effective part of a lean organisation where the money is.